Charter schools get win in White Hat suit

The 19-month fight over whether Ohio's largest for-profit manager of charter schools must share detailed financial records could be coming to a close.

Charlie Boss, The Columbus Dispatch

The 19-month fight over whether Ohio's largest for-profit manager of charter schools must share detailed financial records could be coming to a close.

Franklin County Common Pleas Judge John F. Bender has decided he can rule on the case, and he reiterated an order he made in August that White Hat Management release records showing how the charter-school operator spends the millions of tax dollars it gets each year.

Bender had halted the case last month to determine whether the court had the authority to preside over the lawsuit. On Friday, Bender stated that the court had jurisdiction because "common pleas is a court of general jurisdiction."

He ordered the 10 charter schools that have sued White Hat to submit their request for financial information by Jan. 6.

"We're starting over, to some extent," said Karen S. Hockstad, an attorney for the schools. "It looks like the court is willing to work on an expedited discovery because time is an issue at this point."

Hockstad said the schools are operating under an agreement with White Hat that maintains the status quo until either a new agreement is reached or the lawsuit is settled. Schools must notify White Hat by the end of February whether they have decided not to negotiate a new contract. The current pact expires June 30.

In June 2010, 10 Hope Academies and Life Skills Centers in Cleveland and Akron filed suit against White Hat, contending that the company has refused to disclose how it spent the money it received.

Under contracts with the company, the schools turned over 96 percent of operating funds they receive from the state to White Hat. In return, the company handled virtually all elements of the schools' operations, including hiring and firing their administrators and teachers.

The company is owned by Akron businessman and major Republican Party donor David L. Brennan, who pushed for state laws that expanded Ohio's charter-school movement.

White Hat provided the schools with some financial records, but Hockstad said they are not detailed enough to allow the schools' governing bodies to evaluate their financial status or White Hat's performance. For example, White Hat reported spending a certain amount on "building services," but it was unclear whether that was for facility upkeep, janitorial staff or other expenses.

Bender ruled that the charter schools are entitled to the records because they are legally responsible for taxpayers' dollars.

"Public funds are allocated to the community school, not the management company," he wrote. "A community school remains accountable for how public funds are spent, whether it contracts with a management company or not."

In October, Bender ruled that White Hat is a "public official" when acting as an authorized agent of a charter school. The designation makes White Hat subject to Ohio public-record laws, requiring it to account for the public dollars it receives, information that the company has been unwilling to disclose for years.

Charles R. Saxbe, a Columbus lawyer representing White Hat, said the company wants to see what kind of information the schools are requesting.

"If they ask for information we don't believe we're obliged to give under the contract, and that information could be proprietary to White Hat, then we'll object," Saxbe said. "But we will wait and see what the plaintiffs ask for, and if there is a dispute, we'll advise the court we'd like to settle the issue as pursuant to the contract."

White Hat may submit objections to the charter schools' requests by Jan. 13.